Palo Alto Networks (N:PANW)
Information Technology - Communications Equipment | Reports November 23, after the close.
The Estimize consensus calls for EPS of $0.33, only a penny higher than the Wall Street consensus and company issued guidance, but the dispersion between revenue estimates is wider. Currently, the Estimize community is looking for sales of $287.69, $4M above what the Street is expecting and nearly $6M above company guidance.
What to watch: Even in a crowded cybersecurity space, Palo Alto has been holding it’s own and steadily beating earnings expectations for the last four quarters, and revenue expectations for the last eight. The corporation is known for providing best in class security for private corporations, government and service providers. Despite increased demand for security services over the last year, not all in the space are winners which has allowed PANW to swoop in and steal a bit of market share. The company’s closest competitors are Fireeye (O:FEYE) and Fortinet (O:FTNT), both of which disappointed on revenues last quarter. By the end of their 2015 fiscal year, Palo Alto boasted more than 26,000 customers, with new customer acquisition trends remaining healthy into FQ1 2016. Year-over-year billings grew nearly 70% in the latest quarter, continuing a long trend of high double-digit growth in that area, one investors hope can be maintained in the new year. The company also recently announced the launch of it’s latest product, Aperture, an SaaS offering used to increase security for cloud service providers (CSPs) such as Dropbox and Google (O:GOOGL) Drive. This is certainly a space with significant growth opportunities as the number of cloud-based applications have been forecasted to grow 20 - 30% in the next three years.
Tiffany & Co. (N:TIF)
Consumer Discretionary - Specialty Retail | Reports November 24, before the open.
The Estimize consensus calls for EPS of $0.75, a penny higher than the Wall Street consensus. Currently, the Estimize community is looking for revenues of $973.14M, just slightly higher than the Street’s expectation for $972.05M.
What to watch: This luxury retailer has been struggling for sometime, with EPS growth turning negative in the last two quarters, and revenues ending up flat last quarter, but down in the prior two. Currency headwinds have been a large detractor of results all year long. The strong dollar hurts Tiffany’s in two ways. First off, the company makes close to half of its of sales overseas, therefore repatriation of those sales to the US dollar hurt the top-line. Secondly, now management is worried that the dollar has become so strong that it may impact U.S. sales. Tiffany’s does well when tourists visit its upscale stores and spend money, the stronger dollar may cause international tourists to be more conservative. A lack of tourism has been heavily mentioned by retailers this season, including Macy's (N:M) which reported a significant decline in international tourist sales when they released Q3 results two weeks ago. Asia in particular is one of Tiffany’s strongest regions, accounting for 37% of net sales in 2014. Weakness in the Chinese economy, along with the continued decline of luxury good sales in Japan due to the consumption tax increase that kicked in over a year ago, also don’t bode well for the company. So far this year the stock is off by 30%.
DSW (N:DSW)
Consumer Discretionary - Specialty Retail | Reports November 24, before the open.
The Estimize consensus calls for EPS of $0.50, a nickel above the Street’s $0.45. Currently, the Estimize community is looking for sales of $675.81M, also higher than Wall Street’s $665.52M.
What to watch: DSW has one of the largest deltas between the Estimize and Wall Street EPS consensus this week, with a spread of 11%. Wall Street has drastically reduced their estimates by 11 cents in the last three weeks, while Estimize has only reduced their consensus by 7 cents. The reason for the downward revisions is related to a worst than expected pre-announcement on November 4, with DSW lowering full year 2015 guidance to a range of $1.40 - $1.50 from a prior expectation of $1.80 - $1.90. The company also announced that CEO Mike MacDonald would be retiring at the end of the year, and would be replaced by Roger Rawlins, a move that made investors anxious. After same store sales increased by an impressive 5.1% in the first quarter, they dropped to 1.8% in Q2, and are expected to remain in the low single digits in Q3. Despite any recent shake-ups in the company, DSW continues with its store expansion. Now with 449 total locations, the company is expected to open three new small format stores this fall, and 7 locations in Canada. The stock is down 6% since the November announcement.
Dollar Tree (O:DLTR)
Consumer Discretionary - Multiline Retail | Reports November 24, before the open.
The Estimize consensus calls for EPS of $0.54, in-line with Wall Street. Currently, the Estimize community is looking for sales of $4.817B, lower than than the Street’s $4.837B.
What to watch: Dollar Tree is now the largest deep-discount retailer in the country. Since acquiring Family Dollar Stores (N:FDO) this summer, snagging that acquisition from competitor Dollar General (N:DG), they now run a total of 13,500 stores nationwide, vs. Dollar General’s 11,000. While this will mean great things for Dollar Tree in the long-run, costs of the acquisition and integration will eat into the bottom-line in the near future. Because of the unknown impact of these factors, management did not provide a full year outlook this year as they usually do, to the dismay of investors who took the stock down 18% since it’s peak in March. Dollar Tree stores typically occupy small neighborhoods, too small for Wal-Mart’s. But the discount wars are heating up as Wal-Mart Stores (N:WMT) and even Target (N:TGT) eye smaller neighborhoods. Wal-Mart plans to open up 200 smaller stores this year alone, bringing the total up to 700 of its total 3,200 stores worldwide. Target is further behind, but has made opening up their TargetExpress stores a main priority going forward.
Hewlett-Packard (N:HPQ)
Information Technology - Computers & Peripherals | Reports November 24, after the close.
The Estimize consensus calls for EPS of $0.46, two cents above the Wall Street consensus. For revenues, the Estimize community is looking for $12.935B vs. the Street’s $12.835B.
What to watch: This will be the first quarter that HP reports since it’s split into two separate entities: HP and Hewlett Packard Enterprise. Hewlett Packard Enterprise will focus on servers, software, storage and networking services, while it’s struggling HP Inc. business will sell printers and PCs. The hope is that the two companies can function better than they did as one. This is the largest spin out in the 76-year old company’s history, with the spin out of Agilent in 2002 as the second. Unlike that spinout, however, this will result in two large cap companies that both remain in the S&P 500, with total revenues of close to $60B. HPQ has certainly been a weak spot for the last few years, with the free fall of the PC market and impact of a strong US dollar eating into sales.